If you spend more than an hour each week tracking your mutual
funds, you may have too many. So says Richard Moroney, editor of
the weekly newsletter Dow Theory Forecasts.

So how do you figure out just how many mutual funds to maintain?
"If you consider conventional wisdom, you should have one or
two mutual funds for each asset class," says Moroney.
"You need to decide how much you want in [domestic] stocks and
bonds and in international stocks. That's the first decision
and from that will flow others. You also want good growth,
small-company and junk bond funds as well as [a short-term
bond]."

When deciding which funds to keep and which to toss, Moroney
advises examining each one to see whether the reason you purchased
it is still valid. Also, compare performance to expenses. If the
return is only fair and the expenses are high, find a stronger fund
in the same category.

Next, consider what percentage of your investment expenditures
will be in each fund. "In general, there's not much reason
to have less than a 10 percent investment in a fund," says
Moroney. "A 10 percent minimum is a way to make sure you
really like the fund."

Another evaluator to use is fund management style, says Moroney.
"Be wary of funds that flip from one approach to
another," he says. "The best managers stick with a
consistent approach."

After you complete your review, Moroney advocates keeping no
more than eight funds. However, this is not an iron-clad rule and
can be modified, especially if you have a large portfolio or enjoy
tracking multiple funds.

Know Your Stuff

Your cousin Jim has a friend who called you with information on
investing in one of the hottest new technology companies around. He
says it's an opportunity to get in on the ground floor. It
sounds legitimate, and besides, Jim is investing, and he's as
honest as the day is long.

Looks like a good place to put your money, right? Not
necessarily. Before you invest your hard-earned dollars in
anything, investigate it. According to the Council of Better
Business Bureaus Inc. in Arlington, Virginia, its affiliates
receive more than 327,000 inquires on the investment industry
annually, and complaints against the industry rose 46 percent from
1995 to 1996.

To provide consumers with information on investment fraud, the
council has published a book, How to be an Informed
Investor. The book examines different, potentially fraudulent
activities--offering a description of schemes, examples of people
who have been scammed and tips on what to watch for. It also
discusses how to select and work with financial planners and
stockbrokers.

The guide book is available from your local Better Business
Bureau or can be ordered from the council for $16.95 (including
postage and handling). Send a check or money order payable to the
Council of Better Business Bureaus Inc., Department 023,
Washington, DC 20042-0023.

Small Chance

Contrary to popular belief, the recent rash of bank mergers and
acquisitions is not leaving small businesses high and dry in the
hunt for capital. And despite what the headlines imply, most small
banks are not being eaten up by the huge institutions; rather,
they're merging with banks of similar size.

According to findings from the Federal Reserve Bank, from 1993
to 1996, more than half (655) of the 1,384 small banks with assets
of $250 million or less that changed ownership were acquired by
banks of the same size. Another 610 were purchased by banks with
assets of $250 million to $5 billion, and only 119 were bought by
banks with assets exceeding $5 billion.

The report, compiled by Federal Reserve economist Nick Walraven,
also found that the small banks that did the acquiring were
typically more active than those banks they acquired in making
small-business loans (defined as commercial and industrial loans
initially in amounts of less than $1 million). That's good news
for entrepreneurs. The study noted, however, that after a bank
initially acquires another institution, the percentage of assets
allocated to small-business loans temporarily dips and then
gradually rises. In general, the picture continues to look good for
small firms seeking bank loans.